Hi guys,
I believe we have touched on this before,(can't find the post!) but is it possible to take out a LOC on your IP's to pay off your PPOR? If so, wont the interest capitalise on your IP's. How will the ATO look at it? What is a private ruling?
Regards,
Fitzer.
This is classed as borrowing for a private purpose and interest will not be deductible.
I agree with Scoitt. As you are borrowing for personal purpose you have less chance to get interest deductible. Private ruling is a process to get rid of legal problems caused for underpaid tax. You can search in web to get better knowledge.
marx, your post doesn't make sense. neither do a few of your other ones.
Fitzer, ATO looks at the purpose the funds are used for not the security. You want to borrow to pay out private expenses so the interest won't be deductible.
What you pay be thinking of is using a LOC to pay the interest on other investment loans. This is totally different and may be possible to structure it so that you can rapidly pay off your home loan.
A private ruling is a request to the ATO for confirmation what you are doing is ok from a tax point of view. You apply, telling the exactly what you want to do and they reply saying if it is ok or not. Once you have one you can rely on it. ie the ATO cannot later say that what you did is not allowable.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
i agree with terry you should apply for a private ruling
.if you take out a line of credit against the ip then use the rent to pay off your ppor and let the ip interest capitalise i wonder how the ato would view it.
i believe they will ask you do you own your ppor ,if no do you intend using the ip rent to help pay off your ppor and let the ip interest compound.
.my gut feeling is if you use the money for any other reason than to pay off your ppor the ato will allow it.again apply for a private ruling
.look up private rulings 69725 (this should be very helpful ) and and my private ruling number 78123 these may be of help.
one key paragraph in my private ruling wasyou will use the rental income to pay the interest and other costs such as rates,insurance and maintenance on the property/and if there is anty shortfall interest will be capitalised.this is because you do not wish to use any personal income to pay the rental expenses.
again this was my case and you should not rely on this and apply for your own private rulinggood luck
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